Ford loses $5.9bn in 4Q, says still won't seek aid

Dearborn (Michigan): Ford Motor Co. said on Thursday it lost $5.9 billion in the fourth quarter and burned through $5.5 billion in cash as sales slumped, but the company still says it does not plan to seek federal loans.

The second-largest US automaker said it lost $2.46 per share, compared with a loss of $2.8 billion, or $1.13 per share, for the year-ago period.

Revenue in the three months ended December 31 fell to $29.2 billion, down 36 per cent from $45.5 billion in the fourth quarter of 2007.

The results missed Wall Street's expectations. Excluding special items, the company reported a $1.37 per share loss for the quarter. On that basis, analysts polled by Thomson Reuters expected a fourth-quarter loss of $1.30 per share on revenue of $27.1 billion.

Ford shares were unchanged at $2.03 in premarket trading.

Dearborn-based Ford also announced that its credit arm would cut 20 per cent of its work force, or 1,200 jobs, and it has reached agreement with the United Auto Workers union to end the "jobs bank" in which laid-off workers get most of their pay, although the effective date is still being negotiated.

The company said special items accounted for $1.4 billion of its net loss, largely due to personnel reductions and investment losses on money set aside for a union-administered trust that will take over retiree health care costs in 2010. Ford has about $2 billion in investments in that account, which can be used to fund operations, if needed.

The Treasury Department made loans to Ford's US-based competitors last month, allocating $13.4 billion to General Motors Corp. and $4 billion for Chrysler LLC.

Company spokesman Mark Truby said Ford's position on seeking federal loans is unchanged. It asked for a $9 billion line of credit from the government but has said it has enough cash to make it through 2009 and doesn't intend to use government loans unless economic conditions worsen.

"We don't plan to or foresee using it," Truby said on Thursday.

Ford said it had $13.4 billion cash on hand as of December 31 and plans to exercise a $10.1 billion secured credit line Tuesday. Chief Financial Officer Lewis Booth said the company is tapping the credit line only to make sure it's available and not to fund its operations.

Ford's cash burn rate slowed for the fourth quarter from $7.7 billion in the third quarter.

"We are confident that our burn rate will be substantially slower in 2009," Booth told reporters on Thursday morning.

For the full-year, Ford reported a full-year net loss of $14.6 billion, compared with a loss of $2.7 billion in 2007.

Booth said Ford still is on track to break even in 2011, but the company anticipates worldwide sales to fall more than 10 per cent in 2009. Ford sees improvement later this year, however, as government stimulus packages take effect.

"Things are so volatile," Booth said. "This is unprecedented."

Vehicle sales in the US are at their lowest levels in 26 years as consumers face tight credit markets and economic uncertainty. Ford's US sales plunged 20.5 per cent in 2008, and its market share fell slightly to 15 per cent from 15.4 per cent in 2007.

That uncertainty has spread to Europe as well, where sales have dropped. Markets such as South America, typically a bright spot for Ford, are also slowing.

Losses in North America weighed down the company's results, with Ford reporting a pretax loss of $1.9 billion. In Europe, Ford posted a fourth-quarter loss of $330 million, compared with a profit of $223 million in 2007. In South America, Ford's pretax profit fell 75 percent to $105 million.

The company's Asia-Pacific and Africa unit lost $208 million in the quarter, due mainly lower sales and unfavorable exchange rates.

Ford is still considering a sale of its Volvo unit, which lost $736 million in the quarter.

The company posted a quarterly pretax profit of $79 million from its investment in Mazda Motor Co. In November, Ford sold a large portion of its 33.4 per cent stake in the Japanese automaker.

Ford's financing arm, Ford Motor Credit Co., reported a pretax loss of $372 million, compared with a profit of $263 million in the year-ago quarter.